Commissions

Frequency of trades can affect returns.

Commissions may come in several forms, most commonly as fees incurred as a result of trades placed to buy and sell the underlying investments in your portfolio. Over time, these fees can add up to a substantial amount, particularly if you place trades frequently yourself or through your investment professional.

What is the general range for these fees?

Commissions can range from less than $10 to more than $100 per trade, depending on the firm. The amount you pay can be even higher if a firm charges commission based on a percentage of the trade.1

Impact of commissions

Hypothetical illustration based on a $100,000 investment over a year with a 5% return.

After 50 trades, a $5,000 market gain has been lost to 1% trade commissions.

Starting portfolio value

# of trades at $100 per trade

Commission on trades

Portfolio value after one year

Difference after one year

$100,000

0

0

$105,000

$5,000

$100,000

25

$2,500

$102,375

$2,375

$100,000

50

$5,000

$99,750

–$250

$100,000

75

$7,500

$97,125

–$2,875

$100,000

100

$10,000

$94,500

–$5,500

Assumption used in the hypothetical chart is $100 per trade and a 5% rate of return after one year. The commission amount can be higher or lower depending on the firm. The figures are designed to show the mathematical effect on the value of a hypothetical portfolio based upon a specified number of trades. Calculation of the adjusted portfolio value after one year is based upon applying the 5% rate of return to the starting portfolio value with the maximum amount of the trading costs deducted. Returns will vary when actual trading takes place in a portfolio. The rate of return depicted is hypothetical and not intended to represent any specific product.

What can I do about this?

Find out what you’re paying in commissions and the frequency of the trades by reviewing your trade confirms or statements or asking your investment professional.